Delta Apparel drops after swinging to Q1 loss
Delta Apparel, Inc. (AMEX: DLA) shares are dipping after the clothing maker reported it swung to a first-quarter loss, due to acquisition costs, lower sales and price increases in raw materials and energy.
“While we remain encouraged with the future opportunities for each of our operating units, we recognize that the weak overall demand for apparel, significant raw material and energy price increases, and production constraints and start-up costs associated with our textile restructuring create risk to our overall profitability in the near future,” CEO Robert Humphreys said in a statement. “Therefore, we are adjusting our fiscal year financial estimates downward accordingly.”
For the second quarter, Delta Apparel anticipates sales in the range of $64 million to $68 million, compared with analyst estimates of $71.5 million. Delta expects a loss of between $0.33 and $0.37 per share, compared with Wall Street projections of earning $0.05 per share and $0.07 per share a year earlier.
For fiscal year, the firm expects net sales in the range of $325 million to $340 million, compared with analyst estimates of $341.5 million. The company anticipates full-year earnings to be in the range of $0.62 to $0.76 per share, compared with Wall Street estimates of $1.48 per share.
“While we are cautious about consumer demand for apparel in the short run, we believe all of our business units are moving forward in a positive direction,” Humphreys said. “These trends should help us position ourselves to take advantage of better market conditions as they unfold. We remain focused on completing our textile restructuring. We expect the excess expense associated with these initiatives will be substantially behind us by the end of our third fiscal quarter.”
Delta also said it will stop paying its quarterly dividend of $0.05 per share in order to improve its financial condition.
In midday trading, DLA shares are down 15.84%, or $2.59, at $13.76. Over the last 52 weeks, shares have ranged from $13.75 to $19.99.
